ACQUISITION AGREEMENT

ACQUISITION AGREEMENT

BY AND BETWEEN

PINNACLE TECHNOLOGIES, INC.,

a California corporation,

as Seller

CARBO CERAMICS INC.,

a Delaware corporation,

as Guarantor

AND

HALLIBURTON ENERGY SERVICES INC.,

a Delaware corporation,

as Purchaser

DATED AS OF AUGUST 28, 2008

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EXHIBIT A - Form of Bill of Sale and Assignment and Assumption Agreement
EXHIBIT B - Form of Cross License Agreement
EXHIBIT C - Form of Modified Working Capital
EXHIBIT D - Form of Patent License Agreement
EXHIBIT E - Form of Transition Services Agreement
EXHIBIT F - Forms of Assignments of Registered Intellectual Property
EXHIBIT G - Purchase Price and Assumed Liabilities Tax Allocation
EXHIBIT H - List of Open Orders

v

ACQUISITION AGREEMENT

This ACQUISITION AGREEMENT is dated as of August 28, 2008, between PINNACLE TECHNOLOGIES, INC., a California corporation (" Seller "), CARBO CERAMICS INC., a Delaware corporation (" Guarantor "), and HALLIBURTON ENERGY SERVICES INC., a Delaware corporation (" Purchaser ").

W I T N E S S E T H :

WHEREAS, Seller beneficially owns and operates (directly and through its Subsidiaries (as defined below)) the Business (as defined below); and

WHEREAS, Seller wishes to transfer (and cause its Subsidiaries to transfer) to Purchaser or its designated wholly owned Subsidiaries, and Purchaser wishes to purchase and assume (or cause its designated wholly owned Subsidiaries to purchase and assume), the Assets and the Assumed Liabilities (each as defined below) from Seller and its Subsidiaries, and Guarantor wishes to guarantee certain obligations of Seller, all upon the terms and subject to the conditions set forth herein; and

WHEREAS, Purchaser and Seller agree that the Transaction meets the requirements of Section 3.316(d) of the Texas Administrative Code thus qualifying the Transaction as an "occasional sale" and rendering it exempt from sales and use Taxes.

NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties, covenants and agreements contained herein, Seller and Purchaser and, for the purpose of Sections 6.03 ( Confidentiality; Publicity ) , 6.15 ( Non-Competition ) , 11.03 ( No Duplication; Exclusive Remedy ) , and Articles I , IV , XII and XIII , Guarantor agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.01. Certain Defined Terms . As used in this Agreement, the following terms have the following meanings:

"Accounts Payable" means actual trade Liabilities of the Business that (a) have been incurred, (b) are in accordance with US GAAP, (c) are made during the ordinary course of business, (d) have been invoiced by the supplier but not yet paid as of the Closing Date, (e) are specifically related to the Assets and Assumed Liabilities and (f) are not allocations from Guarantor or Seller.

"Accrued Expenses" means any Liability incurred as of or before Closing that has not been settled as of Closing. Accrued Expenses relate only to Assets or Assumed Liabilities. For clarity, Accrued Expenses do not include (a) any unpaid salary and benefits due to any Employee of Seller or its Affiliates, (b) any commissions or other fees due to any Agents, (c) any accrued expenses related to Seller’s San Francisco building and (d) any income, real or personal property taxes.

"Accrued Revenue" means services performed by meeting the milestones as set out in this definition as consistently applied over the previous seven (7) months. Revenue is recognized on a percentage completion basis. With regard to microseismic fixed fee contractual rate Assumed Contracts or Open Orders, Accrued Revenue is based on the following (substantiated with proof of each stage):

(i)           Mobilization/installation fee is recognized at the time of occurrence, using the revenue amount set out on the standard price list.

(ii)          Recognition of the remaining revenue is divided equally, with 50% being attributed to acquisition and 50% attributed to analysis, as follows:

"Action" means any litigation, court action or proceeding, lawsuit, originating application to an employment tribunal, or binding arbitration.

"Affiliate" means, with respect to any specified Person, any other Person who or that, directly or indirectly through one or more intermediaries, Controls, is Controlled by or is under common Control with such specified Person. No natural person shall be considered to be an Affiliate of another Person for the purpose of Sections 6.15(a) or (b) solely as a result of his or her (a) ownership of equity interests in Guarantor or its Affiliates, (b) service on the Board of Directors or similar governing body of Guarantor or its Affiliates and/ or (c) service as an executive officer of Guarantor or its Affiliates.

"Agent" means (a) any Person appointed by a power of attorney or similar instrument granted by Seller or Guarantor empowering that Person to represent Seller or Guarantor in matters and dealings by or involving the Business and (b) any agent, sales representative, sponsor or other Person appointed or retained to assist Seller or Guarantor to obtain business or

promote the distribution, marketing or sales of products or services of the Business, including licensing agreements pursuant to which any Person distributes, markets or sells such products or services.

"Agreement" means this Agreement, including the Seller Disclosure Schedule and all Exhibits and Schedules hereto and thereto, and all amendments hereto and thereto made in accordance with Section 13.10 .

"Ancillary Agreements" means the Bill of Sale and Assignment and Assumption Agreement, the Foreign Acquisition Agreements, the Patent License Agreement, the Cross License Agreement, the Transition Services Agreement and the Real Estate Transfer Documents.

"Anti-Corruption Laws" means, collectively, (a) the United States Foreign Corrupt Practices Act, (b) Laws enacted pursuant to the Organization of Economic Cooperation and Development (OECD) Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and (c) any other applicable Laws of relevant jurisdictions prohibiting bribery and corruption.

"Assumed Contracts" means the Material Contracts and all other Contracts relating exclusively to the Business (including those entered into after the date hereof in accordance with Section 6.01 ), but excludes in each case any Contracts that are, or relate exclusively to, Excluded Assets.

"Benefit Plan" means (a) each " employee benefit plan ," within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (" ERISA "), whether or not subject to ERISA and (b) each other bonus, incentive compensation, deferred compensation, profit sharing, stock option, stock appreciation right, stock bonus, stock purchase, employee stock ownership, savings, severance, change in control, supplemental unemployment, layoff, salary continuation, retirement, pension, health, life insurance, disability, accident, group insurance, vacation, holiday, sick leave, fringe benefit or welfare plan and any other employee compensation or benefit plan, agreement, policy, practice, commitment, contract or understanding.

"Bill of Sale and Assignment and Assumption Agreement" means the bill of sale and conveyance to be executed by the parties thereto on the Closing Date, in the form of Exhibit A .

"Business" means the fracture mapping and reservoir monitoring businesses of Pinnacle Technologies, Inc. and its wholly owned Subsidiaries, to the extent the products and services of which are supplied for the Exploration And Production for Hydrocarbons, and the CO2 sequestration business of such entities, as each of the foregoing businesses is conducted on the Closing Date, and the manufacturing of tiltmeters for use in such businesses. The Business shall not include the Excluded Services, Excluded Assets and Overhead and Shared Services. For the avoidance of doubt, the Business shall include all Exploration And Production operations in which any one or more of the following operations are performed: (a) placing or locating any instrumentation (including any tiltmeters or microseismic sensors), (b) acquiring any one or more of (i) microseismic data, (ii) tiltmeter data, (iii) distributed temperature measurement data,

(iv) GPS data or (v) other deformation-based data (including, for example, INSAR data), (c) transmitting any of the above data or results based on such data in real time to a processing center or client office or (d) providing real-time or post processing interpretation to the customer; provided that the Business shall not include the Excluded Services, Excluded Assets and Overhead and Shared Services.

"Business Day" means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by Law to be closed in New York, New York, USA or Houston, Texas, USA.

"Cash Lease Deposits" means cash deposits made by Seller or its Subsidiaries in respect of the leases for its Leased Real Property.

"Code" means the United States Internal Revenue Code of 1986, as amended.

"Consent" means any approval, authorization, consent, order, license, permission, permit, qualification, exemption or waiver by any third party or Governmental Authority.

"Control" means, as to any Person, the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. The term " Controlled " shall have a correlative meaning.

"Cross License Agreement" means the Cross License Agreement to be executed by the parties thereto on the Closing Date, in the form of Exhibit B .

"Current Assets" means the following current assets of the Business determined in accordance with US GAAP on a basis consistent with the Interim Balance Sheet (provided that where the Interim Balance Sheet is inconsistent with US GAAP, the policies and principles used to prepare the Interim Balance Sheet shall control), in each case without duplication: Trade Accounts Receivable, net, Prepaid Expenses and Other Current Assets and Accrued Revenue.

"Current Liabilities" means the current liabilities of the Business determined in accordance with US GAAP on a basis consistent with the Interim Balance Sheet and only to the extent they are included in Assumed Liabilities (provided that where the Interim Balance Sheet is inconsistent with US GAAP, the policies and principles used to prepare the Interim Balance Sheet shall control), including but not limited to the following, in each case without duplication: Accounts Payable, Accrued Expenses and Deferred Revenue.

"Deferred Revenue" is defined as the portion of unrecognized revenue relating to amounts invoiced to customers for Assumed Contracts, for which services up to and including the final report have not been delivered to the customer as of Closing.

"Employee" means any employee of Seller or any of its Subsidiaries (or any predecessor to any such Person) employed in connection with the operation of the Business who is listed in Section 7.01(a) of the Seller Disclosure Schedule .

"Environmental Laws" means any applicable Law relating to pollution or protection of the environment or natural resources.

"Environmental Permit" means any permit, approval, license or other authorization required under any Environmental Law to conduct the Business as currently conducted.

"Equipment" means fixtures, machinery, telecommunications, manufacturing and other equipment, spare parts, components and other interests in tangible personal property listed in Section 1.01(a) of the Seller Disclosure Schedule with such additions or deletions as may be notified by Seller to Purchaser on or prior to Closing undertaken in accordance with Section 6.01 , including in all cases all software installed on or embedded in any of the forgoing and any Intellectual Property Rights covering, embodied in or connected to any of the foregoing for which Seller has the right to transfer but excluding in all cases any Intellectual Property Rights covering, embodied in or connected to any of the foregoing for which Seller does not have the right to transfer (other than, in the case of computer programs or databases, where Purchaser has provided evidence reasonably satisfactory to Seller that Purchaser holds a license to (or otherwise has the right to use) such computer programs or databases).

"Exchange Act" means the Securities Exchange Act of 1934, as amended, together with the rules, regulations, schedules and forms thereunder.

"Excluded Services" means (a) consulting activities on fracture design, fracture modeling, job site quality assurance or quality control analysis, post-fracture production analysis, reservoir engineering and field development studies and (b) other services that primarily focus on demonstrating the conductivity and recovery benefits derived from the use of ceramic proppants in the oil and gas industry.

"Exploration And Production" with respect to Hydrocarbons means any activities associated with the exploration for, access to, or production of Hydrocarbons from a well, reservoir or other subsurface location, including but not limited to the following: (a) monitoring or analyzing the condition, capacity or any other parameter of a well, reservoir or other subsurface location known or believed to contain a Hydrocarbon, (b) planning, directing, performing or monitoring any operations associated with the exploration for, access to or production of any such Hydrocarbon from a well, reservoir or other subsurface location, including but not limited to the following: (i) drilling or boring operations, (ii) gas, liquid or other fluid sequestration operations (specifically including all CO2 sequestration operations, whether or not related to oil or gas operations) and (iii) well injection operations and/or treatment operations, (c) extracting, producing or processing Hydrocarbons associated with coal (such as coal bed methane, coal gasification and coal liquification) and (d) retrieving a solid from the earth for the purpose of extracting or otherwise obtaining Hydrocarbons therefrom (such as retrieval of oil sands, oil shales and gas hydrates).

" Government Official " means (a) any officer, employee or agent of any government (including any government of any country or any political subdivision within a country) or of any department, agency or instrumentality (including any business or corporate entity owned or managed by a government, such as a national oil company or subsidiary thereof) thereof, or any

Person acting in an official capacity or performing public duties or functions on behalf of any such government, department, agency or instrumentality, (b) any political party or official thereof, (c) any candidate for public office or (d) any officer, employee or agent of a public international organization, including, but not limited to, the United Nations, the International Monetary Fund or the World Bank.

"Governmental Authority" means any U.S. or foreign national, federal, state, provincial or local governmental authority, legislative body, court, arbitration panel, stock exchange, commission, tribunal, or regulatory agency, or any political or other subdivision, department or branch of any of the foregoing.

"Governmental Order" means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority.

"Hazardous Materials" means (a) petroleum, petroleum products, asbestos in any form that is friable or polychlorinated biphenyls and (b) any chemical, material or other substance regulated as hazardous or as a pollutant, contaminant or waste under any Environmental Law.

"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the rules and regulations thereunder, each as amended from time to time.

"Hydrocarbons" shall mean any solid, liquid, gas or mixed phase fluid containing a hydrocarbon, but shall not include coal when retrieved for direct use as a fuel (as opposed to retrieval of coal for extraction of hydrocarbon-containing gas or fluid therefrom).

"Intellectual Property Rights" means all intellectual property rights throughout the world, including all (a) patents and patent applications, (b) Trademarks and any goodwill associated therewith, (c) copyrights (including registrations and applications therefor) and (d) Trade Secrets and (e) rights in worldwide web addresses, Uniform Resource Locators, and domain names.

"Inventory" means inventories held for use exclusively in the operation and conduct of the Business, including raw materials, goods in process, finished goods and specific packaging and labels used in connection with the Business.

"Knowledge of Seller" or "Seller’s Knowledge" means the actual knowledge, without further inquiry, of any of the individuals listed in Section 1.01(b) of the Seller Disclosure Schedule .

"Law" means any law, statute, ordinance, regulation, rule, code, common law or other requirement or rule enacted or promulgated by any Governmental Authority, including any Governmental Order.

"Leased Real Property" means all real property leased or subleased by Seller or its Subsidiaries other than listed in Section 1.01(g) of the Seller Disclosure Schedule .

"Liabilities" means debts, liabilities, commitments and obligations (including guarantees and other forms of credit support), whether accrued or fixed, absolute or contingent, matured or unmatured, on- or off-balance sheet, including those arising under any Law or Action and those arising under any contract, agreement, arrangement, commitment or undertaking or otherwise.

"Lien" means any mortgage, deed of trust, pledge, hypothecation, security interest, encumbrance, claim, lien, license, lease or charge of any kind.

"Losses" means any and all losses, liabilities, obligations, damages, injuries, judgments, settlements, costs, penalties, fines and expenses (including interest and penalties recovered by a third party with respect thereto, costs of investigation and defense and reasonable attorneys’ fees and expenses).

"Material Adverse Effect" means a material adverse effect on the operations, results of operations or financial condition of the Business as proposed to be transferred hereunder, taken as a whole, but in each case shall not include the effect of events, changes and circumstances relating to (a) the oil and gas services industry, to the extent the Business is not disproportionately impacted relative to other industry participants, (b) macroeconomic factors, interest rates, general financial market conditions, acts of God, war, terrorism or hostilities to the extent the Business is not disproportionately impacted relative to other industry participants, (c) changes in Law, generally accepted accounting principles or official interpretations of the foregoing, (d) any effect on the Business resulting from failure to take any action to which Purchaser refused consent under this Agreement, (e) the Transactions or any announcement hereof or the identity of Purchaser, (f) matters actually known to Purchaser as of the date hereof or (g) the matters set forth in Section 1.01(c) of the Seller Disclosure Schedule ; it being understood that the failure of the Business to achieve internal or external financial forecasts or projections, by itself, will not constitute a Material Adverse Effect.

"Modified Working Capital" means the Business’s Current Assets minus the Business’s Current Liabilities. A calculation of Modified Working Capital as of June 30, 2008, is attached hereto as Exhibit C .

"Overhead and Shared Services" means ancillary corporate or shared services provided to or in support of the Business that are general corporate or other overhead services or provided to both the Business and other businesses of Guarantor, Seller and/or their Subsidiaries, including access to travel and entertainment services, temporary labor services, office supplies services (including copiers and faxes), personal telecommunications services, computer hardware and software services, fleet services, energy/utilities services, procurement and supply arrangements, treasury services, public relations, legal and risk management services (including workers’ compensation), payroll services, sales and marketing support services, information technology and telecommunications services, accounting services, tax services, internal audit services, human resources and employee relations management services, employee benefits services, credit, collections and accounts payable services, logistics services, property management services, environmental support services and customs and excise services, in each case including services relating to the provision of access to information, operating and reporting systems and databases and all hardware and software or other intellectual property used in

connection therewith. Overhead and Shared Services shall not include any item in the previous sentence that is (a) exclusive to the Business, rather than shared with any other line of business or the general corporate operations of Guarantor, Seller and/or their Subsidiaries and (b) provided solely by or using Transferred Employees and Assets.

"Owned Real Property" means the owned real property listed in Section 1.01(d) of the Seller Disclosure Schedule , together with Seller’s right, title and interest in all buildings, improvements and fixtures thereon and all appurtenances thereto.

"Patent License Agreement" means the Patent License Agreement to be executed by the parties thereto on the Closing Date, in the form of Exhibit D .

"Permitted Liens" means (a) Liens for Taxes that are not yet due or are being contested in good faith by appropriate proceedings, (b) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen and other Liens imposed by Law, in each case, for amounts not yet due, (c) Liens incurred or deposits made in the ordinary course of business, (d) zoning, entitlement, building and land use regulations, customary covenants, defects of title, easements, rights -of -way, restrictions and other similar charges or encumbrances not materially interfering with the ordinary conduct of the Business or, with respect to Owned Real Property, Liens disclosed on existing title reports or existing surveys made available to Purchaser as of the date hereof and any encumbrances of which Purchaser receives notice in any title commitment related to the Owned Real Property prior to the date hereof, (e) Liens that will be released prior to or as of the Closing, (f) Liens arising under any of the Transaction Documents, and (g) any utility company or Governmental Authority rights, easements or franchises for electricity, water, sanitary sewer, steam, surface water drainage, gas, telephone or other service or the right to use and maintain poles, lines, wires, cables, pipes, boxes and other fixtures and facilities in, over, under and upon any of the Owned Real Property or Leased Real Property or other general easements granted to Governmental Authorities in the ordinary course of developing or operating any Owned Real Property or Leased Real Property; provided , however , that in the case of clauses (d) through (h), none of the foregoing materially interfere with the use or occupancy or value of such Owned Real Property or Leased Real Property taken as a whole.

"Person" means any natural person, general or limited partnership, corporation, limited liability company, firm, association or other legal entity.

"Prepaid Expenses and Other Current Assets" means amounts paid in cash for services not yet provided or consumed that relate specifically to the Assets. Prepaid expenditures prior to the Closing Date will be amortized on a straight line basis over the length of the service period or recognized when the goods or services are received. For clarity, Prepaid Expenses and Other Current Assets does include (a) advances to Transferred Employees and (b) refundable deposits.

"Prohibited Payment" means any payment or provision of money or anything of value (including any loan, reward, advantage or benefit of any kind), either directly or indirectly, to any Government Official or immediate family member of any Government Official, to influence any act, decision or omission of any Government Official, to obtain or retain business, to direct

business to Seller or Guarantor or to gain any advantage or benefit for Seller or Guarantor. Prohibited Payments do not include: (a) any facilitating payment to a Government Official the purpose of which is to expedite or to secure the performance of a routine governmental action (e.g., obtaining a visa), or (b) a reasonable and bona fide expenditure, such as travel and lodging expenses, incurred by or on behalf of a Government Official that is directly related to the execution or performance of a contract with a foreign government or agency.

"Purchaser Benefit Plan" means each Benefit Plan sponsored, maintained or contributed to by Purchaser or any of its Subsidiaries and in which any Transferred Employee is eligible to participate or derive a benefit as of the Closing Date in accordance with Article VII .

"Purchaser Canadian Subsidiary" means the entity or entities owned or controlled by the Purchaser that will be acquiring the Assets of Seller Canadian Subsidiary.

"Real Estate Transfer Document" means, with respect to each parcel of Owned Real Property, a special warranty deed in favor of Purchaser, or at the written request of Purchaser, in favor of one of its Affiliates, which it designates in writing, and with respect to each parcel of Leased Real Property, a lease assignment (collectively, the " Real Estate Transfer Documents ").

"Registered Intellectual Property" means any Transferred Intellectual Property that is issued, granted or registered by or with any Governmental Authority or for which an application therefor has been filed with any Governmental Authority.

"Seller Benefit Plan" means each Benefit Plan sponsored, maintained or contributed to by Seller or any of its Affiliates (or with respect to which Seller or any of its Affiliates is a party or may have any liability) and in which any Employee is or may become eligible to participate or derive a benefit.

" Seller Canadian Subsidiary " means Pinnacle Technologies (Canada) Inc., a corporation formed under the laws of Canada.

"Seller Disclosure Schedule" means the disclosure schedule delivered by Seller to Purchaser on or prior to the date hereof.

"Shares" means all equity interests owned by Seller in Davidson Energy, Inc., a Delaware corporation (" Davidson ").

"Straddle Period" means any Taxable period that includes, but does not end on, the Closing Date.

"Subsidiary" of any Person means any corporation, partnership, limited liability company, joint venture or other legal entity of which such Person owns, directly or indirectly, a majority of the stock or other equity interests the holders of which are generally entitled to vote for the election of or act as the board of directors or other governing body of such corporation or other legal entity, or of which such Person is a general partner or managing member.

"Supplier Warranty Agreements" means any express or implied warranty, guarantee of performance or similar agreement or obligation made by the manufacturer, supplier or seller of an Asset that by its terms or under applicable Law cannot be transferred in connection with the transfer of the relevant Asset.

"Tax" or "Taxes" means any and all taxes, charges, fees, levies, imposts, duties or other assessments of any kind whatsoever, imposed by or payable to any federal, state, provincial, local, or foreign tax authority, including any gross income, net income, alternative or add -on minimum, franchise, profits or excess profits, gross receipts, estimated, capital, goods, services, documentary, use, transfer, ad valorem, business rates, value added, sales, customs, real or personal property, capital stock, license, payroll, withholding or back -up withholding, employment, social security, workers’ compensation, unemployment compensation, utility, severance, production, excise, stamp, occupation, premium, windfall profits, occupancy, transfer or gains taxes. The term "Taxable" shall have a correlative meaning.

"Tax Returns" means all returns, reports (including declarations, disclosures, schedules, estimates and information returns) and other information required to be supplied to a Tax authority relating to Taxes.

"Trade Accounts Receivable, net" means accounts receivable for merchandise actually delivered or services actually provided that have arisen from bona fide transactions and have been billed and are due within one-hundred and fifty (150) days of the date on the invoice net of the allowance for doubtful accounts. For clarity, Trade Accounts Receivable, net does not include (a) transactions with Seller’s Affiliates, (b) any receivables owed by PetroChina Company, Limited and (c) any receivable owed by any Agent.

"Trade Secrets" means information meeting the definition of a trade secret as set forth in the Uniform Trade Secrets Act as well as proprietary information, know how, technology, technical data, customer lists and all documentation embodying or evidencing any of the foregoing, in whatever form maintained (documents, electronic records, mental impressions, source or object code, etc.).

"Trademarks" means trademark registrations and applications and any common law rights to the associated trademarks, service marks, brand names, distinguishing guises, trade dress, trade names, words, symbols, designs, color schemes, business names, Internet domain names and other indications of origin.

"Transaction Documents" means this Agreement, the Ancillary Agreements and any certificate or other document delivered by any party hereto or thereto in connection herewith or therewith.

"Transfer Taxes" means all goods, services, excise, gross receipt, withholding, documentary, value added, stamp, registration, filing, recordation and all other similar Taxes or other like charges, together with interest, penalties or additional amounts imposed with respect thereto.

"Transferred Intellectual Property" means (a) those patents and patent applications, invention disclosures and un-filed patent applications, each as listed in Section 1.01(e) of the Seller Disclosure Schedule , (b) those Trademarks listed in Section 1.01(e) of the Seller Disclosure Schedule and all goodwill associated therewith, (c) those copyright registrations and applications listed in Section 1.01(e) of the Seller Disclosure Schedule together with any other copyrights owned by Seller or any of its Subsidiaries as of the Closing Date and used exclusively in connection with the Business, (d) all Trade Secrets owned by Seller or any of its Subsidiaries as of the Closing Date and used exclusively in connection with the Business, (e) all rights in worldwide web addresses, Uniform Resource Locators and domain names listed in Section 1.01(e) of the Seller Disclosure Schedule , (f) all certificates of registration or filing, and all other documentations relating to any of the foregoing and (g) all right, title and interest in any of the foregoing, including all rights to enforce and to collect damages for past infringements thereof.

"Transferred Software" means the computer programs and databases listed in Section 1.01(f) of the Seller Disclosure Schedule and all Intellectual Property Rights in or pertaining thereto and further including, to the extent reasonably within Seller’s possession or control, all source code, object code, pseudo-code, databases, libraries, lookup tables, preliminary analysis and development documents, intermediate development tools (including all Matlab and Excel-based development materials), and including all prior versions and all documentation and any other materials relating thereto.

"Transition Services Agreement" means the Transition Services Agreements to be executed by the parties thereto on the Closing Date, in the form of Exhibit E Parts I and II, taken together.

"US GAAP" means, at any time, generally accepted accounting principles in the United States in effect as of such time.

"US Trade Laws" means, collectively, (a) the Export Administration Regulations (including but not limited to prohibitions against complying with any unsanctioned foreign boycott) administered by the United States Department of Commerce, (b) the International Traffic in Arms Regulations administered by the United States Department of State, (c) the trade and economic sanctions administered by the Office of Foreign Assets Control of the United States Treasury Department and (d) any other applicable Law regulating trade by U.S. companies or in U.S. items, services or technology.

SECTION 1.02. Other Defined Terms . The following terms have the meanings defined for such terms in the Sections set forth below:

SECTION 1.03. Interpretation .

(a)          Words in the singular shall include the plural and vice versa, and words of one gender shall include the other genders, in each case, as the context requires.

(b)          The terms "hereof," "herein," and "herewith" and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement and not to any particular provision of this Agreement, and Article, Section, paragraph, Exhibit and Schedule references are to the Articles, Sections, paragraphs, Exhibits and Schedules to this Agreement unless otherwise specified.

(c)          The word "including" and words of similar import shall mean "including, without limitation," unless otherwise specified.

(d)          The phrases "made available to Purchaser" or "furnished to Purchaser" shall include documents that were posted to the "Project Rose" data room at https://bdr121808.bmcgroup.com, prior to, and that remain accessible to Purchaser on, the date that is one day prior to the date of this Agreement or, if later, the date upon which such documents were required to be made available.

ARTICLE II

PURCHASE AND SALE OF ASSETS

SECTION 2.01. Purchase and Sale of Assets; Exclusion of Excluded Assets .

(a)          On the terms and subject to the conditions set forth in this Agreement, at the Closing, Seller shall (or, as applicable, shall cause a Subsidiary of Guarantor to) sell, transfer, convey and assign to Purchaser (or, as applicable, one or more wholly owned Subsidiaries of Purchaser designated by Purchaser not less than ten (10) Business Days prior to the Closing Date), and Purchaser shall (or, as applicable, shall cause such wholly owned Subsidiary or Subsidiaries of Purchaser to) purchase and accept from Seller (or, as applicable, such Subsidiary of Seller) all of Seller’s and its Subsidiaries’ right, title and interest in and to each of the following assets, properties and rights, but in each case excluding the Excluded Assets (such assets, properties and rights, the " Assets "), free and clear of all Liens other than Permitted Liens or Liens created by or through Purchaser or any of its Subsidiaries:

(i)        the Owned Real Property;

(ii)       the Assumed Contracts;

(iii)        the accounts receivable of the Business (excluding (1) accounts receivable from Seller’s Affiliates, (2) any accounts receivable owed by PetroChina Company, Limited and (3) any account receivable owed by any Agent) Prepaid Expenses and Other Current Assets, Accrued Revenue and Cash Lease Deposits of the Business;

(iv)        the Equipment;

(v)         the Inventory;

(vi)        the Shares;

(vii)       copies of books of account, supplier and customer lists, correspondence, marketing and promotional materials (including website content), records and files, in each case used or held for use exclusively in the conduct of the Business;

(viii)      the office building located at 9499 W. Sam Houston Parkway North, Houston, Texas 77064, USA, including all furnishings thereof;

(ix)         the Transferred Intellectual Property and the Transferred Software, including all files, records and other documentation relating thereto;

(x)          with respect to Contracts pursuant to which Seller (or one or more of its Subsidiaries) provides to the counterparty both the services provided by the Business and other services, the rights thereunder (including in respect of any service order or work order) relating to the Business (such rights relating to the Business, the " Shared Contracts "); and

(xi)         any and all other assets owned immediately prior to the Closing Date by Seller or any of its Subsidiaries that are primarily used, held for use or intended to be used in the Business. The intention of this clause (xi) is only to rectify any inadvertent failure to transfer any assets that, had the parties given specific consideration to such asset as of the date hereof, would have otherwise been classified as an Asset. No asset will be deemed to be an Asset solely as a result of this clause (xi) if such asset is within the category or type of asset expressly covered by the preceding sub-paragraphs (i) – (x) unless the party claiming entitlement to such asset can establish that the omission of the transfer of such asset was inadvertent.

(b)          Notwithstanding anything in this Agreement to the contrary, Seller and its Subsidiaries shall retain their respective right, title and interest in and to, and except as granted pursuant to the Cross License Agreement, Purchaser shall have no right, title or interest in or to, and shall have no rights with respect to the right, title and interest of Seller and its Subsidiaries in and to, the following assets, except to the extent specifically listed in Section 1.01(a) (Equipment), Section 1.01(d) (Owned Real Property), Section 1.01(e) (Transferred Intellectual Property), Section 1.01(f) (Transferred Software) and Section 3.13(a) (Material Contracts) of the Seller Disclosure Schedule ; provided, that in no event shall any assets that are specifically listed in Section 2.01(b)(xvi) of the Seller Disclosure Schedule be sold, transferred, conveyed or assigned to Purchaser pursuant to this Agreement (such assets, the " Excluded Assets "):

(i)           all tiltmeter manufacturing and business activities (including the related property, leases, contracts, accounts receivable, prepaid expenses, deferred revenue, cash lease deposits, equipment, inventory, Intellectual Property Rights (other than Transferred Intellectual Property), books of account, supplier and customer lists, correspondence, marketing and promotional materials (including website content), records and files), to the extent the products and services of which are not supplied for the Exploration And Production of Hydrocarbons;

(ii)          all assets associated with the production, maintenance and sale of FracProPT, StimPT, CementPT and primarily related software;

(iii)         all the business, properties, assets, goodwill and rights of whatever kind and nature, real or personal, tangible or intangible that are owned, leased or licensed by Seller and its Subsidiaries on the Closing Date and are not used or held for use exclusively in the conduct of the Business;

(iv)         the minute books, stock ledgers, Tax records and Tax-related documents of Seller and its Subsidiaries;

(v)          all claims, causes of action and rights of Seller and its Subsidiaries (A) relating to the Business and accruing on or prior to the Closing Date, other than Assets transferred pursuant to Section 2.01(a)(iii) and (ix) , (B) against any third party to the extent relating to any Retained Liability or to any Liability for which Seller or any of its Subsidiaries is responsible under this Agreement or the Ancillary Agreements or (C) under any Supplier Warranty Agreement (including rights of set-off, rights to refunds and rights of recoupment thereunder);

(vi)         all rights to Tax refunds, credits or similar benefits relating to the Assets or the Business attributable to periods, or portions of periods, ending on or before the Closing (which, in case of a Straddle Period, shall be allocated among the parties in a manner consistent with Section 8.03 );

(vii)       all rights of Seller and its Subsidiaries under this Agreement and the Ancillary Agreements;

(viii)      all current and prior insurance policies and all rights of any nature with respect thereto, including all insurance recoveries thereunder and rights to assert claims with respect to any such insurance recoveries;

(ix)         any assets used primarily for the purpose of providing Overhead and Shared Services and, other than as provided in the Transition Services Agreement, any rights of the Business to receive from Guarantor, Seller or any of their Affiliates any Overhead and Shared Services;

(x)          software other than (A) the Transferred Software and (B) other software and computer databases for which Purchaser has obtained a license (or other right to use) as set forth in the definition of "Equipment";

(xi)         except (A) for the Transferred Intellectual Property and (B) as otherwise expressly provided in the Cross License Agreement or the Transition Services Agreement, all rights relating to any Intellectual Property Rights of Guarantor, Seller or any of their Subsidiaries (including Guarantor’s name);

(xii)       all cash, cash equivalents, cash overdraft positions and bank accounts or similar cash items, or prepaid expenses other than Prepaid Expenses and Other Current

Assets of Seller and its Subsidiaries (whether or not reflected on the books of Seller or its Subsidiaries as of the Closing Date);

(xiii)       all stock or other equity interests in any Person other than the Shares;

(xiv)      all records prepared in connection with the sale of the Business to Purchaser;

(xv)       any accounts receivable owed or owing by PetroChina Company, Limited as a result of work performed or obtained by Lily Energy Services, Inc. or any other accounts receivable as a result of work performed or obtained by any Agent; and

(xvi)      any assets set forth in Section 2.01(b)(xvi) of the Seller Disclosure Schedule .

(c)          Subject to the terms and conditions hereof, Seller and Purchaser shall, or shall cause their respective Subsidiaries to, enter into such agreements or instruments (the " Foreign Acquisition Agreements ") providing for the sale, transfer, assignment or other conveyance of any Assets located outside the United States as, pursuant to requirements of applicable local Law, would be required or advisable to be documented separately from this Agreement, which Foreign Acquisition Agreements shall be negotiated in good faith between Seller and Purchaser, but in all events shall be consistent with the terms of this Agreement.

(d)          Seller and its Subsidiaries shall have the right to retain, following the Closing, copies of any book, record, literature, list and any other written or recorded information constituting Assets to which Seller in good faith determines it, Guarantor or their Subsidiaries are reasonably likely to need access for bona fide business or legal purposes.

SECTION 2.02. Assumption of Assumed Liabilities; Retention of Retained Liabilities .

(a)          On the terms and subject to the conditions set forth in this Agreement, at the Closing, Purchaser (or, as applicable, one or more wholly owned Subsidiaries of Purchaser designated by Purchaser not less than ten (10) Business Days prior to the Closing Date) shall assume and become obligated to pay, perform and discharge when due, the following Liabilities of Seller and its Affiliates, whether accrued or arising before, on or after the Closing Date (such Liabilities, the " Assumed Liabilities "):

(i)           all Liabilities under the Assumed Contracts and the Shared Contracts, (other than any Liability arising out of any breach by Seller or its Affiliates of, failure of performance by Seller or its Affiliates under, or non-compliance by Seller or its Affiliates with, any such Assumed Contracts or Shared Contracts that occurred prior to the Closing Date);

(ii)          all Accounts Payable, Accrued Expenses and Deferred Revenue of the Business;

(iii)         all Liabilities relating to Transferred Employees solely to the extent that such Liabilities are to be assumed by Purchaser pursuant to Article VII ; and

(iv)         all Liabilities identified in Section 2.02(a)(iv) of the Seller Disclosure Schedule .

(b)          Seller or the relevant Subsidiary shall retain, and shall be fully responsible for paying, performing and discharging when due, and Purchaser shall not assume or have any responsibility for, any Liabilities of Seller and its Subsidiaries other than the Assumed Liabilities (the " Retained Liabilities "). For the avoidance of doubt, the Retained Liabilities shall include all fees, commissions or other amounts owed to any Agent.

SECTION 2.03. Purchase Price; Allocation of Purchase Price .

(a)          Subject to the terms and conditions of this Agreement, in consideration of the transfer of Assets under Section 2.01 , Purchaser on its own behalf and, as applicable, as agent for its designated Subsidiaries, shall (i) assume and become obligated to pay, perform and discharge the Assumed Liabilities and (ii) pay to Seller an amount of cash (the " Purchase Price ") equal to the sum of (A) U.S.$137,000,000 (the " Base Purchase Price ") plus (B) the amount, if any, by which the Modified Working Capital exceeds U.S.$13,500,000; provided , however , such additional amount shall not exceed U.S.$10,000,000 minus (C) the amount, if any, by which U.S.$ 13,500,000 exceeds the Modified Working Capital; provided , however , such lesser amount shall not exceed U.S.$10,000,000. Notwithstanding the foregoing, in the event that Davidson Instruments, Inc., a Delaware corporation (" Instruments "), exercises its right of first refusal to acquire all of Seller’s interest in Davidson pursuant to that certain Shareholders’ Agreement dated as of October 31, 2007, by and among Instruments, Davidson and Seller, in the time period permitted thereby, the Base Purchase Price shall be reduced by an amount equal to the amount that Seller receives or will receive from Instruments and/or Davidson in connection with such purchase of all of Seller’s interest in Davidson.

(b)          For purposes of determining the amount of cash to be paid as the Estimated Purchase Price by Purchaser to Seller at the Closing pursuant to Section 2.08 , Seller shall prepare and deliver, not less than five Business Days before the Closing Date, a good faith estimate of the Modified Working Capital (such estimated amount, the " Estimated Modified Working Capital ").

(c)          As used in this Agreement, the " Estimated Purchase Price " shall mean an amount equal to the sum of (A) the Base Purchase Price plus (B) the amount, if any, by which the Estimated Modified Working Capital exceeds U.S.$ 13,500,000; provided , however , such additional amount shall not exceed U.S.$ 10,000,000 minus (C) the amount, if any, by which U.S.$ 13,500,000 exceeds the Estimated Modified Working Capital; provided , however , such lesser amount shall not exceed U.S.$ 10,000,000. Notwithstanding the foregoing, in the event that Instruments exercises its right of first refusal to acquire all of Seller’s interest in Davidson pursuant to that certain Shareholders’ Agreement dated as of October 31, 2007, by and among Instruments, Davidson and Seller, in the time period permitted thereby, the Base Purchase Price shall be reduced by an amount equal to the amount that Seller receives or will receive from

Instruments and/or Davidson in connection with such purchase of all of Seller’s interest in Davidson.

(d)          Purchaser and Seller agree that the Purchase Price and the Assumed Liabilities shall be allocated among the Assets in accordance with §1060 of the Code. Purchaser shall prepare an allocation of the Purchase Price and the Assumed Liabilities among the Assets in accordance with §1060 of the Code and the Treasury Regulations thereunder (and any similar Law, as appropriate), in the manner provided in the model allocation attached hereto as Exhibit G . Purchaser shall deliver such allocation within 60 days after the final Purchase Price and the Assumed Liabilities have been finalized pursuant to Section 2.04 . After delivery of the allocation by Purchaser to Seller, Seller shall have a reasonable opportunity to review and comment upon such allocation. In the case of a dispute between Purchaser and Seller on the allocation, the parties shall negotiate in good faith to ensure the allocation is in accordance with §1060 of the Code. Any subsequent allocation necessary as a result of an adjustment to the consideration to be paid hereunder shall be prepared in the same manner. For all Tax purposes, Purchaser and Seller and their Subsidiaries and/or Affiliates shall report, act and file Tax Returns (including, but not limited to IRS Form 8594) in all respects and for all purposes consistent with such allocation prepared by Purchaser. Neither Purchaser nor Seller shall take any position for Tax purposes (whether in audits, Tax Returns or otherwise) that is inconsistent with such allocation unless required to do so by applicable Law.

SECTION 2.04. Purchase Price Adjustment .

(a)          The Purchase Price shall be determined after the Closing in accordance with this Section 2.04 based upon the amount of Modified Working Capital. For purposes hereof, the statement of the Modified Working Capital, together with the calculation of the Purchase Price pursuant to this Section 2.04 , shall be referred to as the " Closing Statement ."

(b)          The Closing Statement shall be prepared by Seller on the basis of, and using the same accounting principles, methodologies and policies reflected in, this Agreement. If the Purchase Price as finally determined in accordance with this Section 2.04 (i) is less than the Estimated Purchase Price, Seller shall pay to Purchaser the amount by which the Estimated Purchase Price exceeds the Purchase Price or (ii) exceeds the Estimated Purchase Price, Purchaser shall pay to Seller the amount by which the Purchase Price exceeds the Estimated Purchase Price, in either case by wire transfer, within three Business Days after the final determination of the Purchase Price, of immediately available U.S. Dollar funds to an account designated by the party receiving payment, plus interest on such amount accrued from the Closing Date to the date of such payment at the prime rate applicable from time to time as published in the Wall Street Journal.

(c)          As promptly as practicable (and in any event within 60 days after the Closing), Seller shall prepare and deliver to Purchaser the Closing Statement prepared in accordance with this Section 2.04 . Purchaser will provide Seller and its accountants access to the books, records and personnel of the Business throughout the periods during which the Closing Statement is being prepared. If Purchaser disagrees with the determination of the Closing Statement, Purchaser shall notify Seller of such disagreement within 30 days after delivery of the Closing

Statement (such notice, the " Disagreement Notice "). The Disagreement Notice shall set forth, in reasonable detail, any disagreement with, and any requested adjustment to, the Closing Statement. Matters as to which Purchaser may submit disagreements (and the Disagreement Notice) shall be limited to whether the Closing Statement delivered by Seller was prepared on the basis of, and using the same accounting principles, methodologies and policies reflected in, and accurately calculated in accordance with this Agreement, and Purchaser shall not be entitled to submit disagreements on any other basis (including as to whether such principles, methodologies and policies are or were appropriate). If Purchaser fails to deliver the Disagreement Notice by the end of such 30-day period, Purchaser shall be deemed to have accepted the Closing Statement delivered by Seller. Matters included in the calculations in the Closing Statement to which Purchaser does not object in the Disagreement Notice shall be deemed accepted by Purchaser and shall not be subject to further dispute or review. During the period prior to Purchaser’s delivery of any Disagreement Notice, Purchaser shall have reasonable access to all documents, schedules and workpapers used by Seller in the preparation of the Closing Statement and all books, records and personnel related to the Business and relevant to the preparation of the Closing Statement. Purchaser and Seller shall negotiate in good faith to resolve any such disagreement with respect to the Closing Statement, and any resolution agreed to in writing by Purchaser and Seller shall be final and binding upon the parties.

(d)          If Purchaser and Seller are unable to resolve any disagreement as contemplated by paragraph (c) of this Section 2.04 within 30 days after delivery of a Disagreement Notice by Purchaser, Purchaser and Seller shall jointly select a partner at a mutually agreeable accounting firm to resolve such disagreement. If Purchaser and Seller are unable to reach agreement on the identity of such a partner within 20 days after the expiration of such 30-day period, either party may request that a partner at a nationally recognized accounting firm be appointed by the American Arbitration Association. The individual so selected shall be referred to herein as the " Accounting Arbitrator ." Purchaser and Seller shall instruct the Accounting Arbitrator to consider only those items and amounts set forth in the Closing Statement as to which Purchaser and Seller have not resolved their disagreement. Purchaser and Seller shall use commercially reasonable efforts to cause the Accounting Arbitrator to deliver to Purchaser and Seller, as promptly as practicable (and in no event later than 30 days after his or her appointment), a written report setting forth the resolution of any such disagreement determined in accordance with the terms of this Agreement. Such report shall be final and binding upon the parties. In the event the Accounting Arbitrator concludes that Seller was correct as to a majority (by dollar amount) of the disputed items, then Purchaser shall pay the Accounting Arbitrator’s fees, costs and expenses. In the event the Accounting Arbitrator concludes that Purchaser was correct as to a majority (by dollar amount) of the disputed items, then Seller shall pay the Accounting Arbitrator’s fees, costs and expenses.

(e)          Purchaser and Seller agree that any payments made pursuant to this Section 2.04 shall be allocated in a manner consistent with the allocation referred to in Section 2.03(d) .

SECTION 2.05. Closing . Subject to the terms and conditions of this Agreement, the sale and purchase of the Assets and the assumption of the Assumed Liabilities, all as contemplated hereby, shall take place at a closing (the " Closing ") at the offices of Mayer Brown LLP, 700 Louisiana Street, Suite 3400, Houston, Texas 77002 to be held at 10:00 AM, Central time, on the

first Business Day (the " Closing Date ") that is two Business Days following the satisfaction or waiver of all of the conditions to the obligations of the parties set forth in Article IX (other than conditions to be satisfied at the Closing, but subject to the waiver or fulfillment of those conditions).

SECTION 2.06. Closing Deliveries by Seller . At the Closing, Seller shall deliver or cause to be delivered to Purchaser:

(a)          a counterpart of each of the Ancillary Agreements, executed by each of Seller and its Subsidiaries that is a party thereto, to the extent not delivered prior to the Closing;

(b)          affidavits, indemnities, and other similar instruments as are reasonably required by the title company for (i) the deletion of any standard or printed exceptions in the title policies (excluding matters relating to surveys) that are customarily deleted by virtue of a seller delivering such instruments in commercial transactions of similar type to that contemplated by this Agreement, and (ii) the satisfaction of Internal Revenue Service disclosure and reporting requirements relating to Form 1099B. All such affidavits, indemnities and similar instruments shall be in form and substance reasonably satisfactory to the title company; and

(c)          any other documents required pursuant to this Agreement or reasonably requested by Purchaser.

SECTION 2.07. Closing Deliveries by Purchaser . At the Closing, Purchaser shall deliver or cause to be delivered to Seller:

(a)          a counterpart of each of the Ancillary Agreements, executed by each of Purchaser and its Subsidiaries that is a party thereto, to the extent not delivered prior to the Closing;

(b)          the Estimated Purchase Price by wire transfer in immediately available funds, to an account or accounts designated at least two Business Days prior to the Closing Date by Seller in a written notice to Purchaser; and

(c)          any other documents required pursuant to this Agreement or reasonably requested by Seller.

SECTION 2.08. Accounting . To the extent that, after the Closing, (a) Purchaser or any of its Subsidiaries receives any payment or instrument that is for the account of Seller or any of its Subsidiaries according to the terms of this Agreement, Purchaser shall promptly deliver such amount or instrument to Seller, and (b) Seller or any of its Subsidiaries receives any payment or instrument that is for the account of Purchaser or any of its Subsidiaries according to the terms of this Agreement, Seller shall promptly deliver such amount or instrument to Purchaser.

SECTION 2.09. Nonassignable Assets .

(a)          Nothing in this Agreement, nor the consummation of the transactions contemplated by this Agreement or the Transaction Documents (" Transactions "), shall be construed as an attempt or agreement to assign or transfer any Asset (including any Assumed

Contract or Shared Contract) to Purchaser (or the relevant Subsidiary of Purchaser) which by its terms or by Law is nonassignable without a Consent (a " Nonassignable Asset "), unless and until such Consent shall have been obtained. To the extent permitted by applicable Law and by the terms of the applicable Nonassignable Asset, such Nonassignable Asset shall be held, as of and from the Closing, by Seller (or the relevant Subsidiary of Seller) for the benefit and burden of Purchaser (or the relevant Subsidiary of Purchaser) and the covenants and obligations thereunder shall be fully performed by Purchaser (or the relevant Subsidiary of Purchaser) on Seller’s (or such Subsidiary’s) behalf and all rights and Liabilities existing thereunder shall be for Purchaser’s (or such Subsidiary’s) account. For the avoidance of doubt, the designation of an Asset as a Nonassignable Asset does not render it an Excluded Asset.

(b)          To the extent permitted by applicable Law and by the terms of the applicable Nonassignable Asset, Seller and Purchaser shall take, or cause to be taken, such actions as the other party may reasonably request that are required to be taken or appropriate in order to provide Purchaser with the benefits and burdens of the Nonassignable Assets. Seller shall promptly pay over to Purchaser the net amount (after expenses and Taxes) of all payments received by it (or such Subsidiary) in respect of all Nonassignable Assets and Purchaser shall indemnify Seller (or such Subsidiary) for all Losses attributable to Seller’s (or such Subsidiary’s) holding of all Nonassignable Assets.

(c)          Nothing in this Section 2.09 shall require Seller or any of its Subsidiaries to renew any Nonassignable Asset that is an Assumed Contract or a Shared Contract. In addition, Seller (or the applicable Subsidiary of Seller) shall have the right, any time after the nine-month anniversary of the Closing Date to exercise any right to terminate any Nonassignable Asset that is an Assumed Contract or a Shared Contract and that is a customer contract or a master services agreement.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SELLER

Except (a) as set forth in the Seller Disclosure Schedule, (b) as disclosed in, or as readily apparent from, the Financial Information, (c) as contemplated by this Agreement or (d) to the extent relating solely to the Excluded Assets or the Retained Liabilities, Seller represents and warrants to Purchaser that all of the statements contained in this Article III are true as of the date of this Agreement (or, if made as of a specified date, as of such date). Each section of the Seller Disclosure Schedule qualifies the correspondingly numbered representation and warranty to the extent specified therein, it being agreed that disclosure of any item in any section of the Seller Disclosure Schedule shall also be deemed to be disclosed with respect to any other section of this Agreement to which the relevance of such item is reasonably apparent. The inclusion of any information in any section of the Seller Disclosure Schedule or other document delivered by Seller pursuant to this Agreement shall not be deemed to be an admission or evidence of the materiality of such item, nor shall it establish a standard of materiality for any purpose whatsoever.

SECTION 3.01. Organization and Good Standing . Seller, and each of its Subsidiaries that is or will be a party to any of the Ancillary Agreements, is duly organized, validly existing and in good standing under the Laws of its jurisdiction of organization and has all requisite power and authority to own, lease and operate its properties and to carry on its business as it is now being conducted. Seller, and each such Subsidiary is duly licensed or qualified to do business in each jurisdiction in which the properties owned or leased by it or the operation of its business makes such licensing or qualification necessary, except to the extent that the failure to be so licensed or qualified would not reasonably be expected to have, individually or in the aggregate, a material adverse effect upon Seller’s or such Subsidiaries’ ability to carry out its obligations under this Agreement and the Ancillary Agreements and to consummate the Transactions.

SECTION 3.02. Authority . Seller, and each of its Subsidiaries that is or will be a party to any of the Ancillary Agreements, has full power and authority to execute and deliver this Agreement and the Ancillary Agreements to which it is or will be a signatory and to perform its obligations hereunder and thereunder. The execution, delivery and performance by Seller and each such Subsidiary of this Agreement and each Ancillary Agreement to which it is or will be a signatory has been duly authorized by all requisite corporate action on the part of Seller and each such Subsidiary. This Agreement has been, and upon execution each Ancillary Agreement will be, duly executed and delivered by Seller and each such Subsidiary that is or will be a party thereto and (assuming due authorization, execution and delivery by Purchaser and, if applicable, by each Subsidiary of Purchaser that is or will be a party thereto) this Agreement constitutes, and each Ancillary Agreement to which Seller or any such Subsidiary is or will be a party constitutes or, when so executed and delivered, will constitute, a legal, valid and binding obligation of Seller and each such Subsidiary, enforceable against Seller and each such Subsidiary in accordance with its terms, subject only to the effect, if any, of (a) applicable bankruptcy and other similar Laws affecting the rights of creditors generally and (b) Laws governing specific performance, injunctive relief and other equitable remedies.

SECTION 3.03. No Conflict; Consents and Approvals . Subject to (a) the filing by Seller of reports under the Exchange Act and as contemplated by the rules and regulations of the New York Stock Exchange, (b) the requirements of the HSR Act and any applicable foreign merger control or competition Laws, (c) any filings and notifications as may be required under applicable property transfer Laws or Environmental Laws and (d) any filings, notifications and Consents that may be required solely by reason of Purchaser’s or any Affiliate of Purchaser’s (as opposed to any third party’s) participation in the Transactions, none of (1) the execution and delivery by Seller or, if applicable in the case of the Ancillary Agreements, any of its Subsidiaries, of this Agreement and the Ancillary Agreements to which it is or will be a party, (2) the consummation by Seller or any such Subsidiary of the Transactions or (3) the compliance by Seller or any such Subsidiary with any of the provisions hereof or thereof, as the case may be, will:

(i)           conflict with, or result in the breach of, any provision of the certificate of incorporation or by-laws or other organizational documents of Seller or any such Subsidiary;

(ii)          require Seller or any such Subsidiary to make any filing with, or obtain any Consent from, any Governmental Authority;

(iii)         conflict with, violate or result in the breach by Seller or any such Subsidiary of any applicable Law;

(iv)         conflict with, violate, result in the breach or termination of or constitute a default under, any Assumed Contract or Shared Contract (except for consent to assign any Nonassignable Assets); or

(v)          result in the creation of any Lien (other than any Permitted Lien or any Lien created by or through Purchaser) upon any of the Assets;

except, in the case of clauses (iii), (iv) and (v), for such matters that would not be material to the Business or impair the ability to consummate the Transaction.

SECTION 3.04. Financial Information . Section 3.04(i) of the Seller Disclosure Schedule sets forth complete and correct copies of certain financial information relating to the Business, including the balance sheet as at June 30, 2008 (" Interim Balance Sheet ") (collectively, the " Financial Information "). The Financial Information has been prepared in good faith on the bases described therein using the financial books and records maintained by Seller for the Business and represents Seller’s good faith estimate of the results of operations data set forth therein for the Business as if the Business had been held and operated on a stand-alone basis, in each case for the periods presented therein. The Financial Information (a) has not been prepared in accordance with US GAAP, (b) includes estimated costs that do not necessarily represent the costs that were actually allocated to the Business for the relevant periods (or that the Business will incur after the Closing) and (c) reflects the historical operation of the Business (including the Overhead and Shared Services) for the periods specified therein.

SECTION 3.05. Absence of Certain Changes or Events . Since December 31, 2007,

(a)          Seller has conducted the Business only in the ordinary course of business consistent with past practice;

(b)          the Business has not suffered any Material Adverse Effect and no event has occurred or circumstance exists that would be reasonably expected to result in a Material Adverse Effect;

(c)          there has not been any action by Seller or any of its Affiliates that, if taken after the date hereof, would constitute a breach of Seller’s obligations under Section 6.01 ; and

(d)          none of Seller or any of its Subsidiaries has granted any material increase in the compensation of any of the Employees outside the ordinary course of business consistent with past practice.

SECTION 3.06. Absence of Litigation . There are no Actions pending against Seller or any of its Subsidiaries or, to the Knowledge of Seller, threatened against Seller or any of its

Subsidiaries that (a) relate to or may affect the Business or the Assets or (b) challenge, or that may have the effect of preventing, delaying, making illegal or otherwise interfering in any material respect with, any of the Transactions or any Ancillary Agreement.

SECTION 3.07. Compliance with Laws . Neither Seller nor any of its Subsidiaries is, in any material respect, in violation of or in the past five years has violated, or failed to comply with, in any material respect, any applicable Law in connection with the Business, and no Action has been filed or commenced against any of them alleging any such failure to so comply.

SECTION 3.08. Ownership of the Assets .

(a)          Seller or one of its Subsidiaries holds good and valid title to or has valid leases, licenses or rights to use all of the Assets free and clear of any and all Liens, except for Permitted Liens.

(b)          All tangible Assets are free from material defects (patent and latent), have been maintained in accordance with normal industry practice and are in good operating condition for immediate use in the ordinary course of business, subject to ordinary wear and tear and ordinary maintenance requirements.

(c)          The Assets, together with the rights conferred to Purchaser pursuant to the Cross License Agreement and the assets and services provided to Purchaser pursuant to the Transition Services Agreement and the Overhead and Shared Services, constitute all of the assets, tangible and intangible, of any nature whatsoever, necessary to operate the Business in all material respects in the manner presently operated by Seller, other than Assets disposed of in the ordinary course of business consistent with past practice; provided that the foregoing is not a representation of non-infringement of Intellectual Property Rights, which is covered solely in Section 3.15(c) .

SECTION 3.09. Real Property .

(a)          Each parcel of real property leased pursuant to the real property leases included in the Assumed Contracts is leased by Seller or one or more of its Subsidiaries free and clear of all Liens on Seller’s or Seller’s Subsidiary’s leasehold interest, as applicable, except Permitted Liens or as specified in such real property lease as made available to Purchaser before the date hereof.

(b)         Except for Permitted Liens,

(i)           neither Seller nor any of its Subsidiaries has made any other agreement to lease, sell, mortgage or otherwise encumber the Owned Real Property (or any portion thereof) or given any Person an option to purchase or rights of first refusal or rights of first offer over the Owned Real Property (or any portion thereof); and

(ii)          Seller or one of its Subsidiaries has good and marketable title to the Owned Real Property and none of the Owned Real Property is subject to any Lien.

(c)          Notwithstanding anything in this Article III to the contrary, none of the representations and warranties in this Article III other than this Section 3.09 shall relate to real property matters.

(d)          There is no pending, nor has Seller received written notice of, any threatened condemnation, litigation, assessment or similar proceeding affecting the Owned Real Property or any part thereof, nor has Seller received written notice that any such condemnation, litigation, assessment or similar proceeding is contemplated by any Governmental Authority, in each case that would be reasonably likely to impair the value of the Owned Real Property.

(e)          Seller has not received any written notice of any violation of any restrictive covenant or any Law of any Governmental Authority pertaining to the Owned Real Property.

(f)           There is no pending or, to the Knowledge of Seller, threatened Action that would materially impair or limit the normal usage or access to the Owned Real Property.

(g)          There is no Action directly against Seller arising out of any of the Leased Real Property, nor is any such Action pending or being prosecuted by or before any Governmental Authority.

(h)          There are no attachments, executions or assignments for the benefit of creditors or voluntary proceedings in bankruptcy or under any other debtor relief Laws or pending by or against Seller or otherwise affecting the Owned Real Property.

SECTION 3.10. Employee Matters .

(a)          There is not currently existing or, to Seller’s Knowledge, threatened, any labor strike, slowdown, work stoppage or lockout against or affecting the Business, nor has there been any such activity within the past 12 months that has materially affected the Business.

(b)          To Seller’s Knowledge, Seller and each of its Subsidiaries have complied in all material respects with all applicable Laws relating to the employment of the Employees.

(c)           Section 3.10(c) of the Seller Disclosure Schedule sets forth, as of the date hereof, a complete list of all collective bargaining or other collective labor agreements which govern the terms and conditions of employment of any Employee. To Seller’s Knowledge, (i) no petition has been filed or proceedings instituted by a union, collective bargaining agent, Employee or group of Employees with any Governmental Authority seeking recognition of or as a bargaining representative with respect to any Employees, and (ii) none of Seller, any Subsidiary of Seller or any labor union or